Company Update: CG Power and Industrial Solution Ltd (CG) - ACCUMULATE - TP Rs.84 - Kotak

- CG stock has corrected sharply since our previous update (dated 29th May 2017). We believe that currently at PER of 16.2x FY19 earnings, company's stock is trading at reasonable valuation. We move recommendation to 'ACCUMULATE' (Buy on declines) from 'SELL' earlier with unchanged target price of Rs 84.

- CG has accepted an offer for acquisition of the company's US business (comprised in its subsidiary, CG Power systems USA Inc). The proposed divestment (valued at EV of USD 37 mn) is a part of company's strategy of debt reduction and focusing on its core operations and core market in India. We however note that the stock movement would track successful divestment of remaining international business (mainly European business) in near/medium term.

Shares of CG Power and Industrial Solution Ltd. was last trading in BSE at Rs.80.35 as compared to the previous close of Rs. 79.95. The total number of shares traded during the day was 197553 in over 797 trades.

The stock hit an intraday high of Rs. 80.5 and intraday low of 78.05. The net turnover during the day was Rs. 15751907.

Source : Equity Bulls

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